Judge blocks pension changes until ruling on lawsuit

A sweeping pension reform law passed by the legislature in December that was to take effect June 1 was put on hold indefinitely Wednesday by Circuit Judge John Belz.

“I do think it has led to great confusion … almost across-the-board confusion,” Belz said in a Sangamon County courtroom as he issued a temporary restraining order and preliminary injunction blocking implementation of the law until further action of the court or resolution of the case. “There’s just too much uncertainty.”

A status hearing in the case is set for May 22.

Lawyers for a variety of organizations representing state workers and retirees said the law, which cuts back on benefits including annual percentage increases in pensions, violates the Illinois Constitution’s pension guarantee.

“The ultimate question of constitutionality has yet to be decided, but I think it’s pretty clear from what we heard today that this law is going away, as it should,” Don Craven, who represents Illinois State Employees Association Retirees, said after the ruling.

Dave Blanchette, spokesman for Gov. Pat Quinn, said the delay in the law would not affect bills in the works to keep state government operating into the new fiscal year, which begins July 1.

“We did not build any savings into this year’s proposed … budget, anticipating that this issue would still be working its way through the court system,” Blanchette said.

Quinn has said the pension fix helps the state’s long-range fiscal outlook.

But lawyers opposing the law said the constitutional guarantee that public pension benefits in the state “shall not be diminished or impaired” trumps such issues.

“The financial underpinnings of the state and the bond rating of the state will be dealt with in a manner that comports with the Constitution of the state of Illinois,” Craven said.

The We Are One Illinois Coalition of public-employee unions had filed the motion for a temporary restraining order and preliminary injunction. Michael Carrigan, president of the Illinois AFL-CIO, issued a statement on behalf of the coalition following Wednesday’s hearing.

“We are pleased the court prudently chose to halt implementation of these sweeping changes, which have caused so much fear and uncertainty and are likely to be overturned,” Carrigan said.

Michael Freeborn, a lawyer representing the coalition, argued during the hearing that lawmakers “deliberately ignored the Constitution” with passage of the law.

“It’s positively cynical that they called it pension reform,” Freeborn said, when it was state officials who “didn’t hold up their end of the bargain for decades” by not adequately funding pension systems.

Assistant Attorney General Doug Rees spoke against a full blockage of the law as “way out of line with potential harm” being caused. He said those immediately affected by the law were only people in the midst of making a decision whether to retire or not.

The attorney general’s office had reached a proposed agreement that was much more limited — to delay for a year implementation of the law for university and community college employees.

But Belz’s ruling went further than that proposed agreement.

Aaron Maduff, a lawyer for the State Universities Annuitants Association, said the proposed agreement had been just “half a loaf” compared to the preliminary injunction issued by Belz.

“The critical key that the judge caught … is that people are confused,” Maduff said. Without the ruling, he said, people thought they had to retire quickly or risk getting much smaller pension payments.

“This order now means nobody has to sit there and wonder, ‘Do I fall into a category that I have to retire?’” Maduff said.

John Myers, lawyer for the Retired State Employees Association, said he was glad Belz showed, through his ruling, that there is at least a fair question of if the pension law violates constitutional rights.

“I don’t think anybody in this room doubts that the act is severely contrary to the Constitution,” Myers said.

He said many people he represents have their pension as a sole source of income, and “they’ve already been whacked” by having to pay health insurance premiums re-imposed after the state had promised to pay for that coverage.

State Rep. Elaine Nekritz, D-Northbrook, an architect of the pension law, said she “would have been shocked had there not been a stay.”

“Because of the import of this, it should have been stayed and we should wait and see, frankly, what the Supreme Court does,” she said.

Nekritz said she thinks the law is constitutional.

“I think the legislature provided some tools that will allow the courts to find it constitutional in part because of the trying to balance current state services with the pension payment,” she said. “But also we provided some consideration. We reduced the amount that current employees will have to pay.”

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